Jurisdiction of Assessing Officer – Assessment by Non-Jurisdictional AO Held Invalid

The core issue before the Tribunal was whether an assessment framed by an Assessing Officer who did not issue the statutory notice under Section 143(2) of the Income-tax Act, 1961, and who lacked jurisdiction over the assessee, could be sustained in law in the absence of a valid transfer of jurisdiction under Section 127 of the Act. The question further extended to whether such a jurisdictional defect could be cured by participation of the assessee in assessment proceedings or by the deeming fiction under Section 292BB of the Act.

Case Citation: The case was decided by the Delhi Bench of the Income Tax Appellate Tribunal in Vivek Mann v. ITO vide order dated 30 January 2026, authored by the Judicial Member Shri C.N. Prasad.

Facts of the Case: The assessee’s return of income for A.Y. 2015–16 was selected for scrutiny, and a notice under Section 143(2) dated 26 July 2016 was issued by the Income Tax Officer, Ward-1, Karnal. Subsequently, all further notices under Section 142(1) and the final assessment order were issued and passed by the ITO/ACIT, Ward-5, Karnal. There was no material on record to indicate that the case had been transferred from Ward-1 to Ward-5 through a valid order under Section 127 of the Act. The assessee contended that in the absence of such a transfer order, Ward-5, Karnal never acquired jurisdiction to complete the assessment, rendering the assessment order void ab initio.

Findings of the Assessing Officer and the CIT(A): The Assessing Officer, namely ACIT/ITO, Ward-5, Karnal, completed the assessment by proceeding on the basis of the notice issued under Section 143(2) by ITO, Ward-1, Karnal, without independently issuing a jurisdictionally valid notice. The Commissioner of Income Tax (Appeals) / NFAC upheld the assessment without adjudicating the jurisdictional defect in depth and proceeded on the premise that the assessment proceedings were validly initiated and conducted. The appellate authority did not examine the absence of a transfer order under Section 127 or its legal implications on the jurisdiction of the Assessing Officer who completed the assessment.

Findings of the ITAT: The Tribunal admitted the additional ground raised by the assessee, holding that the issue of jurisdiction was a pure question of law going to the root of the assessment and could be raised at any stage of the appellate proceedings. On merits, the Tribunal held that jurisdiction to frame an assessment arises only when a valid notice under Section 143(2) is issued by the Assessing Officer having lawful jurisdiction over the assessee. It was observed that where a notice under Section 143(2) is issued by one Assessing Officer and the assessment is completed by another, a valid order under Section 127 transferring jurisdiction is mandatory. In the absence of such an order, the transferee officer does not acquire jurisdiction merely by conducting proceedings. The Tribunal categorically held that Section 292BB does not cure a case of complete lack of jurisdiction or non-issuance of notice by the competent authority. Participation by the assessee cannot confer jurisdiction on an officer who otherwise lacks it.

Key Legal Principles

1. Jurisdiction flows from a valid notice
   Jurisdiction to frame an assessment arises only when notice under Section 143(2) is issued by the correct Assessing Officer.
2. Transfer under Section 127 is mandatory
   When a case is shifted from one Assessing Officer to another who otherwise lacks jurisdiction under Sections 120/124, a formal order under Section 127 is compulsory.
   In the absence of such an order, the transferee Assessing Officer does not acquire jurisdiction.
3. Assessment by a non-jurisdictional AO is void
   Since Ward-5 completed the assessment without lawful jurisdiction, the assessment is void ab initio.
4. Section 292BB not applicable
   This was a case of non-issuance of notice by the correct Assessing Officer, not a mere defect in service.
   Participation by the assessee cannot cure lack of jurisdiction.

Accordingly, the assessment framed by Ward-5, Karnal, was held to be without authority of law and void.

Cases Relied Upon

In arriving at its conclusion, the Tribunal placed reliance on the judgments of the Supreme Court in National Thermal Power Co. Ltd. v. CIT (229 ITR 383) and Jute Corporation of India Ltd. v. CIT (187 ITR 688) for admission of additional legal grounds.

On the issue of jurisdiction, reliance was placed on the Delhi High Court decision in Raj Sheela Growth Fund (P) Ltd. v. ITO (446 ITR 26), as well as on coordinate bench decisions including Manoj Kumar v. ACIT (79 ITR (Trib) 158), Sanjay Kumar Singhal v. ACIT (2025 (5) TMI 282 – ITAT Delhi), and the Punjab & Haryana High Court decision in Col. Paramjit Singh v. CIT (220 ITR 446).

Reference was also made to CIT v. Lalitkumar Bardia (84 taxmann.com 213) (Bom), reiterating that jurisdiction cannot be assumed by consent or participation.

Outcome: The Tribunal held that the assessment order passed by a non-jurisdictional Assessing Officer without a valid transfer order under Section 127 was bad in law and liable to be quashed. Accordingly, the assessment was annulled on the jurisdictional ground itself, and all other grounds raised by the assessee were left open without adjudication. The appeal of the assessee was thus allowed on the legal issue relating to jurisdiction.

Judicial Precedents Relied Upon

• Raj Sheela Growth Fund (P) Ltd. v. ITO (446 ITR 26) (Delhi HC)
• Manoj Kumar v. ACIT (79 ITR (Trib) 158) (Delhi)
• Col. Paramjit Singh v. CIT (220 ITR 446) (P&H)
• Sanjay Kumar Singhal v. ACIT (2025 (5) TMI 282 – ITAT Delhi)
• CIT v. Lalitkumar Bardia (84 taxmann.com 213) (Bom)